China Eximbank provides $133.3 million preferential buyer’s credit for Tari-Mt. Hagen 132 kv Transmission Line Project

Project narrative

In October 2014, the Government of Papua New Guinea signed a memorandum of understanding with TBEA regarding the Tari-Mt. Hagen 132 kv Transmission Line Project. Then, in 2018, China Eximbank and the Ministry of Treasury of the Government of Papua New Guinea signed a $133,379,867.35 preferential buyer’s credit (PBC) agreement for the Tari-Mt. Hagen 132 kv Transmission Line Project. The PBC reportedly carries a 30-year maturity and an interest rate between 1% and 2%. The other borrowing terms of the PBC are unknown. However, it is known that the Ministry of Treasury of the Government of Papua New Guinea on-lent the proceeds of the PBC to Kumul Consolidated Holdings (a PNG state-owned enterprise, formerly known as Independent Public Business Corporation (IPBC). The ultimate borrower (Kumul Consolidated Holdings) was to use the proceeds of the PBC to finance 85% of the cost of a $157 million commercial (EPC) contract between PNG Power Ltd (a state-owned power utility), Kumul Consolidated Holdings, and Tebian Electric Apparatus (TBEA). The purpose of the project was to construct a 189 km, 132kV transmission line from Mt Hagen to Tari in Hela Province via Mendi. It also involved the construction of four new sub-stations in Mt Hagen, Pauanda (Paunda), Mendi and Tari. The ultimate goal was to build power lines to link and feed the Ramu Grid with electricity generated from Hides gas. TBEA was the contractor responsible for implementation. A formal groundbreaking ceremony took place on June 6, 2018. The project was ultimately completed 7 months ahead of schedule on or around May 10, 2021.